It's getting hard to find an optimist in Detroit.
After years of bankruptcies, slowing production and a continuing consumer shift away from North American branded automobiles, industry watchers are predicting that 2008 could be the worst year in a decade for auto manufacturing.
CSM Worldwide, the Northville, Mich.-based automotive consulting group, estimates that North American automakers will make 15.8 million cars and light trucks in 2008, down from 16.2 million in 2007 and a high of 17.7 million in 2000.
``I've seen estimates as low as 14.5 million, if we actually go into a national recession,'' added Richard Newsted, president of Allen Park, Mich.-based auto supplier Meridian Automotive Inc. ``I think it'll be a difficult year for everyone.''
There will be pockets of increased production for some automakers and their suppliers, however, including Toyota Motor Corp., which has stated that it expects global sales to climb 5 percent in 2008, enough to overtake Detroit-based General Motors Corp. as the world's biggest automaker.
``It depends on who you're supplying to,'' said Rod MacDonald, managing director of Cleveland-based KeyBanc Capital Markets. ``If you're primarily supplying to the Big Three, then you've got a different view than you do if you're supplying to Toyota or one of the other [non-U.S.-based automakers].''
But even within GM, Dearborn, Mich.-based Ford Motor Co. or Chrysler LLC in Auburn Hills, Mich., there are cars that will be strong performers, and companies that will do well because they make parts that carmakers are willing to pay for, MacDonald said.
That could mean opportunities for companies doing well despite the auto slump, he said. Firms that are focused and stable could even grow - if they can access capital. Banks have little cash to invest in the auto supply sector, and likely will be focused on saving the companies that already owe them money.
That leaves molders going to private equity groups to finance growth, or get needed capital to remain fiscally stable. Molders that are not in good shape now, though, likely will not find many willing investors in 2008.
``If they are overleveraged or on the wrong [cars], then it's not going to be a pretty picture,'' he said.
At Allen Park, Mich.-based Meridian, which just emerged from bankruptcy itself in late 2006, Newsted said the company is focused on stripping costs out of its operations and boosting nonautomotive sales to keep pace with an industry that is continuing to suffer, and adjust to changes in the marketplace.
It's a different mind-set in the industry now, than it was eight years ago at the auto industry's zenith, he said.
``It's really gotten to the point that we've had to consider that all of the [automakers] are doing continuous restructuring,'' he said. ``It's routine.''